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UK company car fuel benefit is one of the least-favourable BiK arrangements available. Instead of taxing you on actual private fuel value, HMRC applies a flat rate: £27,800 × your car's BiK emission % × your marginal Income Tax rate. For a higher-rate driver in a typical petrol company car (30% BiK), that's ~£3,336/year of tax — often 2-3x the value of the private fuel actually consumed. Decline the fuel benefit and pay for your own private fuel; ask employer to reduce salary or increase salary instead. This guide covers the maths + why to decline.
Checked against the 4 sources listed below · Last reviewed 14 June 2026
Example — higher-rate, electric car:
- Fuel benefit BiK: £27,800 × 3% = £834
- Higher-rate tax: £334/year
- EVs are the exception where fuel benefit can be reasonable
Why decline
Most employees drive well below £8,340 of private fuel per year:
- 8,000 private miles at 40 mpg petrol = £780 in fuel
- Even 15,000 private miles = ~£1,500 in fuel
You'd pay £3,336 tax on £1,500 of value. Terrible ratio.
When fuel benefit works
Electric company car with home charging + high private mileage
Very high private mileage (~30,000+ miles per year private)
Company car with fuel included at very low BiK (< 5%)
The alternative
Decline fuel benefit
Employer pays only for business fuel via expenses/mileage claim
You pay for private fuel from net pay
Save the tax vs the actual fuel cost
In short
UK company fuel benefit tax = £27,800 × emission % × marginal rate. Nearly always massively more than actual private fuel cost. Decline for petrol/diesel cars. Can work for EVs with home charging.
Frequently asked questions
What's the 2026/27 fuel benefit multiplier?
£27,800 — flat rate applied regardless of actual fuel consumed.
Should I take company fuel benefit?
Almost never for petrol/diesel. Occasionally for EVs. Do the maths on your specific case.
What is a P11D — The UK P11D form is submitted annually by employers to HMRC reporting all Benefits in Kind provided to employees. You get a copy showing your total BiK for the tax year. HMRC uses this to adjust your tax code and collect BiK tax.
More on related topics
Childcare vouchers — UK childcare vouchers closed to new joiners in October 2018 — existing users can continue. Tax-Free Childcare replaced it (£2,000/child/year government top-up). This guide covers both + which is better for your situation.
Company car tax — UK company car BiK tax is calculated as list price × emission-band % × your marginal Income Tax rate. Electric cars sit at 3% BiK for 2026/27 (rising 1% per year), making them exceptionally tax-efficient. This guide covers the maths + when a company car beats a car allowance.
Company car vs allowance — UK company car is better than cash car allowance for electric vehicles (3% BiK) at higher-rate tax. Cash allowance is better for petrol/diesel cars at higher-rate. This guide covers the specific numbers.
All tax figures on this page use the same configuration that powers our
calculators — see our
editorial standards for the review process.
Last reviewed: 14 June 2026.
Next review due 14 December 2026.
Disclaimer: This page provides general information based on published HMRC and gov.scot figures. It is not personal tax or financial advice. For your specific situation, please consult a qualified accountant or contact HMRC directly.